Insuring Property and Liability Risks 2nd Edition

Table of Contents

 

Chapter 1

Why Do We Have Insurance?

 

1

Why is There a Need for Insurance?

What is Risk?

1

2

Liability Facts and Figures

Premium Dollars: A Certain Loss

4

5

Insurance Takes Away the Worry

6

Charge It!

7

Marine Insurance Keeps the Goods Moving (Place Utility)

7

Insurance Line Development

There Is Always a Way

8

8

Fire Insurance: One of the First Forms Invented

Heavy Wildfire Losses

9

9

Policies Often Based on Traditional Practices

Making the Policy Practical

11

11

Standardization Became Necessary

The Standard Fire Policy

12

14

Chapter 2

Understanding the Impossible

 

18

Four Basic Parts in the Fire Insurance Form

18

Declarations

19

The Insuring Agreements

20

When is the Policy Effective?

21

Binders

22

Canceling the Policy

Credit Scoring

23

26

What are the Principle Concepts of Insurance?

27

    Indemnity

27

    Insurable Interest

28

Using the Mortgage Clause

30

When Negligence or Neglect is a Factor

Lender’s Responsibility

31

31

Proportional Payments

31

When More Than One Mortgage Exists

32

Chapter 3

Liability Limitations

 

33

Insuring for Logical Amounts

33

Actual Cash Value

34

Repair or Replace?

36

Policy Language has Specific Meanings (Doctrine of Proximate Cause)

37

Chapter 4

When Multiple Policies Exist

 

39

Who Pays What?

40

    Companies That Are Not Able to Pay

41

“Other Insurance” Alternatives

41

Non-Concurrent Policies

42

What Happens When Claimants Refuse the Offer?

43

Chapter 5

Insurance Does Not Always Pay Everything

 

45

How Coinsurance Works

46

Why Would a Policyholder Want Coinsurance?

48

Small Versus Large Property Owners

50

Coinsurance History

Consumer Distrust

50

51

Coinsurance Variety

52

Deductibles

Why Are Deductibles Used?

53

53

    Straight Deductibles

    Convertible Deductibles

54

54

    Cumulative and Participating Deductibles

    Franchise Deductibles

54

55

    Progressively Diminishing Deductibles

To Recap

55

57

Loss Limitation Clauses

Pro Rata Distribution clause

58

58

In Closing

58

Chapter 6

What Are We Insuring Against?

 

60

Perils

Defining the Losses

60

60

Loss and Damage by Fire

61

Lightning

Removal of Goods

63

64

Exceptions

66

Arson

67

Coverage for Fire Department Charges

Debris Removal

68

68

Exceptions to Payment

69

Peril Expansion

71

Extended Coverage Endorsement

72

    How the Deductible Applies

72

Windstorm and Hail

73

Beach Plans

74

Explosion

74

Riot and Civil Commotion

75

Aircraft & Vehicles

Smoke

The Apportionment Clause

76

76

76

Joint Loss

The Optional Perils Endorsement

78

78

Vandalism & Malicious Mischief Endorsement

79

Earthquake & Volcanic Eruption Insurance

80

Automatic Sprinkler Coverage

81

Water Damage

82

Flood Insurance

83

Chapter 7

Fire Insurance Forms

 

86

Putting the Policy Together

86

Policy Forms

87

Residential Policy Forms - Dwelling Forms

Dwelling and Contents Form

87

88

Dwelling Coverage

88

Contents Coverage

90

Dwelling and Contents Broad Form

92

Replacement Cost Coverage

Dwelling Buildings Special Form

92

93

Dwelling Policy Program

93

Commercial Forms

94

    Property Covered - Coverage A – Buildings

95

    Coverage B – Personal Property of the Insured

95

    Coverage C – Personal Property of Others

95

It Does Not Cover Everything

95

Extensions of Coverage

96

How is the Policy Arranged?

98

Is the Policyholder Adequately Insured?

99

Chapter 8

Marine Insurance

 

100

What is Marine Insurance?

Is There a Standard Marine Policy?

100

100

Classifying Marine Policies

101

    First Group: Loss or Damage to Conveyances

101

    Second Group: “Port Risk Only” Policies

102

    Third Group: Fleet Policies

102

    Fourth Group: “Full Form” and “Total Loss Only” Policies

103

    Fifth Group: Hull Policies Adapted to the Type of Vessel

104

Liability Protection

104

    Class 1 - Collision

104

    Class 2 - Protection and Indemnity Insurance policies

105

    Class 3 - Excess Protection and Indemnity Insurance

105

    Class 4 - Water Pollution

105

Chapter 9

Marine Insurance Marketing

 

107

Cost, Coverage, and Sales

Rates: A judgment Call

107

107

Client Evaluation

108

Hull Rates

109

Cargo Rates

110

Considering Past Performance

International Competition

Pleasure Boats

111

111

111

Yacht Hull Coverage

112

Other Coverage for Yachts

113

    First Coverage - Protection and Indemnity Insurance

114

    Second Coverage - Federal Compensation Insurance

114

    Third Coverage - Medical Payments Insurance

114

Reading the Yacht Policy

114

Outboard Policies

115

Chapter 10

Inland Marine Insurance

 

116

Goods in Transit

Why is it Called “Inland Marine” Insurance?

116

116

Growth of the Inland Marine Insurance Industry

116

    Nationwide Marine Definition

118

Inland Marine Insurance Characteristics

120

All-Risks Protection

121

Excessive Hazard

Property Normally Covered by Other Insurance

122

122

Wear and Tear

123

Dampness or Extremes of Temperature

123

Carelessness of the Insured

Carelessness of Others

123

123

Mysterious Disappearance

124

Infidelity (a Disloyal Act)

Artificially Generated Electricity

124

124

Earthquake and Flood

War, Acts of War, and Nuclear Reaction

124

124

Underwriting: Moral and Morale Hazards

125

Assignment

The Person or Entity Requesting Coverage

125

125

Imports and Exports (Categories A and B)

125

Domestic Shipments (Category C)

125

Transportation Policies

127

Parcel Post and Registered Mail Policies

128

Registered Mail Policy

129

First Class Mail Policy

130

Other Forms: Armored Car and Messenger Policy

130

Motor Truck Cargo Insurance

130

Public Trucker’s Legal Liability Forms

131

Means of Communication Coverage

132

Chapter 11

Risks & Protection

 

133

Personal Property Floater Risks

133

Scheduled and Unscheduled Floaters

133

Standard Provisions

133

Terminology of the Personal Property Floater

134

Floaters: Personal Property Floater

136

Personal Effects Floater

138

Personal Articles Floater

139

Government Service Floater

140

Snowmobile Floater Policy

140

Nearly Anything is Possible

141

Commercial Property Floater Risks

141

Livestock Floater

142

Accounts Receivable Insurance

143

Valuable Papers & Records Insurance

143

Floor Plan Merchandise Policy

144

Signs and Street Clocks Form

144

Dealer’s Block Insurance

145

Electronic Data Processing

146

Chapter 12

Consequential Loss Insurance

 

148

Loss of Business

148

Business Interruption Insurance

COVID-19 and Loss of Business

Loss of Earnings in Normal Times

148

149

151

A Separate and Specific Policy

151

Describing the Property

152

Indemnity Period

153

Forms

155

Gross Earnings Form

155

The Agreed Amount Endorsement

156

Premium Adjustment Endorsement

157

Extended Period of Indemnity

158

Deferred Loss Payment Endorsement

158

Payroll Endorsements

158

Simplified Earnings Forms

159

Contingent Business-Interruption Insurance

160

An Earnings Form of Business Interruption Insurance

161

Extra Expense Insurance: Business Interruption Means Loss of Business

162

Business Income Coverage Form

163

Policy Definitions

164

Individual Consequential Loss Insurance

165

Rent insurance

165

Forms

Coinsurance

166

167

Period of indemnity

Rates

Additional Living Expense

167

167

168

Leasehold Insurance

168

Recovering Profit Losses

169

Chapter 13

Boiler and Machinery/Glass Insurance

 

171

Boiler and Machinery Insurance

Premium

171

172

Inspection Services

172

Application for Coverage

173

Direct-Damage Policy

174

Primarily Property Coverage

177

Exclusions

178

Endorsements

Business Interruption Endorsement

179

179

Extra Expense Insurance

181

Combined Business Interruption and Extra Expense

181

Consequential Damage Insurance

Utility Interruption

182

182

Glass Insurance

182

Chapter 14 Insurance Ethics

What Ethical Agents Know

Insurance Perceptions

Establishing Ethical Goals

Why Be Ethical?

Following the Law

Ethics in the Workplace

184

184

184

186

189

190

191

Ethics Are the Same Regardless of the Name Used

Understanding How the Past Affects the Future

Companies Set Ethical Guidelines

Promoting Ethical Behavior

An Ethical Theory: Egoism

Is it possible to teach ethical behavior to other people?

What is the scope of ethics?

What does it take to be a moral person?

What quality of work does the individual want to perform?

What is the legacy desired?

Who Determines Ethics?

What are an individual’s responsibilities to other moral people?

The Theory of Objectivist Ethics

Holding an Ethical Code

Looking Professional

Courtesy

Mores

Measuring the Ethical Values of Others

General Education and State Mandated Continuing Education

Getting Education in a Timely Manner

Laying Out Policy Benefits and Limitations

Policy Replacement

When Agents Allow Misconceptions

When the Premiums Seem Too High to the Client

Obtaining Proper Application Signatures

Keeping in Touch After the Sale

Selling the “Fast Buck” Items

Commingling Funds

Professional Investment Advisors

Preparing for Tomorrow

Fixed and Variable Income Vehicles

Financial Management

Due Diligence

Due Diligence Technical Versus Common-Sense Approach

To Recap

Public Images

Selecting Insurers to Represent

Does Legal Automatically Mean Ethical Too?

 

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United Insurance Educators, Inc.

8213 352nd Street East

Eatonville, WA 98328

(253) 846-1155

 

mail@uiece.com